NZD/USD rallies to the highest level since March 12, approaching 0.6200 mark

The intraday USD selling bias picked up pace during the early European session and lifted the NZD/USD pair further beyond mid-0.6100s, to the highest level since March 12.

The pair added to the previous day's modest uptick and gained some strong follow-through traction on Tuesday amid a broad-based US dollar weakness. The latest optimism over a potential COVID-19 vaccine boosted investors' confidence and dented the greenback's perceived safe-haven status.

This comes on the back of the easing of lockdown restriction, which fueled hopes about a global economic recovery from the coronavirus pandemic and remained supportive of the upbeat market mood. This, in turn, provided an additional boost to riskier currencies, including the kiwi.

Apart from this, possibilities of some short-term trading stops being triggered on a sustained move beyond the 0.6145-50 supply zone further contributed to the NZD/USD pair's sudden spike of around 25-30 pips over the past hour or so.

Hence, it will now be interesting to see if the momentum is backed by genuine buying or turns out to be a stop-run amid concerns about worsening US-China relations. It is worth recalling that diplomatic tensions between the world's two largest economies escalated further after China tabled national security laws for both Hong Kong and Macau.

Moving ahead, market participants now look forward to the US economic docket, highlighting the release of the Conference Board's Consumer Confidence Index. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch